As countries around the world strive to attract international direct investments, the Arab Gulf stands apart as being a strong prospective destination.
To look at the viability of the Persian Gulf being a location for international direct investment, one must evaluate whether or not the Arab gulf countries provide the necessary and sufficient conditions to promote direct investments. One of the consequential factors is political stability. How do we assess a state or even a area's stability? Governmental security depends up to a large degree on the satisfaction of inhabitants. Citizens of GCC countries have lots of opportunities to help them achieve their dreams and convert them into realities, which makes a lot of them content and grateful. Additionally, international indicators of governmental stability unveil that there has been no major governmental unrest in in these countries, as well as the occurrence of such an eventuality is extremely not likely given the strong political will as well as the prescience of the leadership in these counties especially in dealing with crises. Furthermore, high rates of corruption can check here be extremely detrimental to international investments as investors dread risks for instance the blockages of fund transfers and expropriations. But, when it comes to Gulf, political scientists in a study that compared 200 states classified the gulf countries as being a low hazard in both categories. Certainly, Ramy Jallad in Ras Al Khaimah, a prominent investor would probably attest that a few corruption indexes confirm that the GCC countries is improving year by year in reducing corruption.
The volatility associated with the exchange prices is one thing investors just take seriously because the unpredictability of currency exchange price changes might have a direct effect on their profitability. The currencies of gulf counties have all been pegged to the US dollar since the late 1990s and early 2000s, and investors such Farhad Azima in Ras Al Khaimah and Oussama el-Omari in Ras Al Khaimah would likely view the pegged exchange price being an essential attraction for the inflow of FDI to the country as investors do not have to worry about time and money spent manging the currency exchange uncertainty. Another important advantage that the gulf has is its geographic position, located at the intersection of Europe, Asia, and Africa, the region functions as a gateway to the rapidly raising Middle East market.
Countries around the world implement different schemes and enact legislations to attract international direct investments. Some countries for instance the GCC countries are increasingly embracing flexible laws, while some have cheaper labour expenses as their comparative advantage. The many benefits of FDI are, needless to say, shared, as if the multinational business finds lower labour costs, it's going to be able to cut costs. In addition, in the event that host country can grant better tariffs and savings, business could diversify its markets by way of a subsidiary. Having said that, the state should be able to grow its economy, develop human capital, enhance job opportunities, and provide usage of expertise, technology, and skills. Therefore, economists argue, that oftentimes, FDI has generated efficiency by transmitting technology and know-how to the host country. However, investors consider a myriad of factors before making a decision to move in a state, but among the list of significant factors which they consider determinants of investment decisions are location, exchange volatility, governmental stability and governmental policies.